The flow of funds leaves open the possibility that the kingdom’s laxity in cracking down on funds flowing to extremists beyond its frontiers may be deliberate.

To be sure, Saudi Arabia has been strengthening its anti-money laundering and terrorism finance regime ever since the 9/11 attacks on New York and Washington in which the perpetrators were primarily Saudi nationals and Al Qaeda attacks in the kingdom itself in 2003 and 2004.

In what apparently reflected frustration with the kingdom’s progress in countering money laundering and terrorism, FATF did not mince its words in its report. “Saudi Arabia is not effectively investigating and prosecuting individuals involved in larger scale or professional (money laundering] activity” and is “not effectively confiscating the proceeds of crime,” the report said.

FATF suggested that the problem was the kingdom’s implementation of anti-money laundering and terrorism finance measures rather than its legal infrastructure. “Saudi Arabia has a legal framework that provides it with an adequate basis to investigate and prosecute ML (money laundering) activities… Saudi Arabia is not effectively investigating and prosecuting individuals involved in larger scale or professional ML activity. Investigations are often reactive rather than proactive, and tend to be straightforward and single layered.,” the report said.

The report’s wording left the possibility open that poor implementation was the result of either a lack of political will or the fact that there is widespread criticism of Prince Mohammed’s reforms within the bureaucracy and the kingdom’s religious establishment despite a crackdown on any form of dissent.

That possibility gains currency given the fact that FATF acknowledges that “Saudi Arabia has demonstrated an ability to respond to the dynamic terrorism threat it faces in country. Saudi Arabian authorities have demonstrated that they have the training, experience and willingness to pursue TF (terrorism finance) investigations in conjunction with and alongside terrorism cases.”

The report noted that Saudi Arabia seldom convicted funders of political violence who were not directly involved in attacks. “This includes TF cases in relation to funds raised in the Saudi Arabia for support of individuals affiliated with terrorist entities outside the kingdom, particularly outside the Middle-East region, which remains a risk. Saudi Arabia’s overall strategy for fighting terrorist financing mainly focuses on using law enforcement measures to disrupt terrorist threats directed at the kingdom and its immediate vicinity,” the report said.

FATF’s criticism is embarrassing for a country that ever since the 9/11 attacks has been attempting to shed its image of having fueled militancy, position itself as a leader in the struggle against militancy and extremism, and project itself as a 21st century knowledge hub by liberalizing its strict social and cultural norms, including the recent lifting of the ban on women’s driving.

It is also awkward because the report puts Saudi Arabia in the position of the pot calling the kettle black when it comes to the 15-month-old Saudi-United Arab Emirates-led boycott of Qatar because it allegedly funds and supports militancy. Saudi Arabia’s failure to garner widespread international support for its boycott or force Qatar to concede heightens the awkwardness.

James Dorsey

James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies, co-director of the University of Würzburg’s Institute for Fan Culture, and co-host of the New Books in Middle Eastern Studies podcast. James is the author of The Turbulent World of Middle East Soccer blog, a book with the same title as well as Comparative Political Transitions between Southeast Asia and the Middle East and North Africa, co-authored with Dr. Teresita Cruz-Del Rosario, Shifting Sands, Essays on Sports and Politics in the Middle East and North Africa, and the forthcoming China and the Middle East: Venturing into the Maelstrom.

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One Comment

Taliban, Al-Qaeda and near all cases of violence related to Islamic extremism is funded by them, but seems that everybody, from the victims from 9/11 onward, is happy with that and don’t feel a need to ask them why. That’s because of the fact that the rest of work is carried out mostly by the intelligence institutions so their financial contribution has remained welcome!

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